INTERVIEW: Nasen Thiagarajan, CEO of Harry’s Bar — “Businesses need the support of local customers now more than ever”
SINGAPORE – There's very little I can tell you about the nightlife scene in Singapore. Which probably explains why I write more about food than innovative cocktail bars that, pre-COVID-19, seems to be sprouting up faster than you can order your third Blue Spin for the night. Not that I haven't had friends try to seek out a convivial night about town with me—I don't drink (except for work), I always insist on catching the last train home (because I'm stingy), and I find myself getting inappropriately sleepy as the night goes on (purely age-related).
So when the opportunity to speak to the CEO of Singapore's most recognisable nightlife institution presented itself, I quickly jumped on it. I know nightspots are not yet permitted to resume operation—not until Phase 3 rolls around—and I was curious to know how these establishments, that depend largely on late opening hours and alcohol sales, are coping. Just last month, Teo Heng Karaoke was forced to shutter half of their outlets islandwide while more recently, it has been reported that Manekineko was considering the same.
In an email interview, I asked Nasen Thiagarajan, CEO of Harry's Bar, to share his thoughts on the sustainability of nightlife establishments, the biggest change Harry's had to undertake to remain afloat, and what other operators in a similar industry can do right now to combat the uncertainty of a COVID-19 world.
What do you remember of your initial reaction when you received official news from the government that dining-in at restaurants and F&B establishments were to be immediately ceased?
Prior to Circuit Breaker, Harry’s already suffered a drop in footfall and we were preparing for the worst. When dine-in restriction was introduced, we knew we had to tighten safety measures while taking immediate actions to shift our focus to the digital arena as we expected a change in consumer demand due to the evolving situation. The introduction of our island-wide delivery and takeaway menu meant that we needed to adjust our manpower accordingly to align with the new business strategy.
While our delivery and takeaway sales during the circuit breaker improved by some 400% compared to pre-COVID, the overall revenue during the circuit breaker was only 5% of our pre-COVID dine-in sales which had a big impact on our P&L and cash flow.
What has been the biggest challenge faced by the nightlife entertainment industry that consumers are mostly unaware of?
For businesses allowed to operate in Phase 2, there are a fair bit of additional costs incurred to put safety measures in place. With the reduced seats and alcohol sale limit of 10.30pm, businesses struggle to balance their books and would require higher seat turns and/or higher spend per person to make the store economics work. It would be safe to say that most F&B businesses in the Phase 2 category continued to operate at a loss.
There are also businesses in the Phase 3 category (night/dance clubs, pubs, bars, karaoke joints) that are even worse off. While the government’s additional JSS support of 75% is applied to further assist these businesses that are not permitted to open at all, the rental relief support for Phase 3 businesses ends in July 2020. These businesses have to start paying rent from August in full and keep as many of their staff employed with zero revenue flowing in. With no indication as to when Phase 3 would start, businesses run a very high risk of shutting down with further unavoidable job losses.
What was the riskiest business pivot Harry's Singapore had to take when faced with the initial shutdown in phase 1 and how has the reaction been to the change?
Like many others, we had to quickly pivot our business to deliveries and takeaway. We had to look at how we could set up a reliable and efficient infrastructure in the shortest time possible, and come up with menu items that would travel well and be exciting for consumers. Since Harry’s has always been known more for our drinks, particularly our beers, we came up with items like Draft Beer 1L Pouches that diners can order in and enjoy at home; and DIY Cocktail and Mocktail Kits that they can make for themselves.
I think we have done quite well with this change. Though the revenue generated from this is nowhere near the numbers we get from in-dining, we still saw a positive uptake in that and we will continue to push our delivery and takeaway services even in Phase 2 and beyond.
What is the most immediate change nightlife operators can do right now to ensure economic sustainability in a time like this? What is the greatest hurdle in navigating this change?
They need to ramp up digital infrastructure to cater to surging online demand now to ensure a sustained business model. For example, at Harry’s, we have re-launched our mobile app with added features, and a new loyalty programme. We also believe that by doing island-wide delivery and offering online promotions, customers are more inclined to order from us and have their orders delivered at their convenience especially that now most of the people are working from home.
The greatest challenge in this transformation is, of course, the adaptability and resources invested. Operationally this change will be difficult to adapt to, and we will need everyone to cooperate and be supportive of it. Businesses will also need to see value in the transformation and review the performance to determine the success after a substantial period of time.
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What has been the most important lesson you've taken away from this experience that might change how you pursue a nightlife entertainment business such as Harry's in future?
It is to run a business with a flexible, creative, and open mind. Take a more flexible approach to run the ground, adopt strategies on what fits best for the business at any point in time, and be receptive to making changes, no matter how drastic, when necessary.
Strong partnerships with landlords, vendors, employees and the ecosystem of the business is so vital in a crisis like this as everyone has to come together and work together to tide through these tough times especially when there is no endpoint. It will come but no one can forecast this clearly nor easily.
In which areas do you feel the government could have done better in absorbing the impact of such an unprecedented pause in the history of Singapore in the F&B industry?
In times of national crises like the one we are currently experiencing, I think that it really involves the coordination and support of all parties—from the government and trade associations, stakeholders, landlords, business owners, and their employees. It is true that many of us rely heavily on the government to provide the right support and infrastructure and ensure a level playing field for businesses, but operators in the industry need to do their part too.
For instance, while I think that the government acted well and as quickly as they could by providing various financial and job support schemes for businesses, and even stepped in to legislate landlords providing rental reliefs for their tenants, I think many of the landlords could have worked faster, more closely, and proactively with their tenants so that the reliefs are more efficiently disbursed.
Phase 2 businesses still struggle tremendously and a keen eye has to be on them to ensure they somehow find a way to stay afloat. Phase 3 businesses definitely need a lot more assistance and support and now is the time (better late than never) to push aggressively to ensure all businesses get a glimpse of hope and are able to navigate through this crisis.
When you look at the current state of dining in Singapore today arising from the COVID-19 situation, what is the one thing that gives you hope?
The one thing that gives me hope is witnessing first-hand the community spirit that exists in the local F&B scene. In downtimes like these, you would expect for businesses to take the “every man for himself” approach in order to remain afloat, but at least from what I have seen in the last few months, that is quite the opposite. Sure, we all have our bottom lines to take care of, but the support system and collaborative spirit that has become even more evident has been truly remarkable to watch.
We have seen many new community initiatives like #SaveFnBSG and The Dine-In Movement, which are essentially groups of restaurants and bars coming together to pool their resources and support each other. We have also seen new trade associations being formed, like the Singapore Cocktail Bar Association and the Singapore Entertainment Affiliation acting as an active voice for the industry. These various initiatives are a testament of the strong community spirit that exists in our local dining and nightlife scene.
Businesses, while slow due to safe distancing measures and restricted operating hours, need the support of local customers now more than ever to keep the industry afloat. It would be sad to see more businesses shut their doors and more Singaporeans lose their jobs if we don’t pull through this crisis together.
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